Keysight Technologies Shares Downgraded At Baird

In a report published Wednesday, Baird analysts downgraded the rating on Keysight Technologies Inc (NYSE: KEYS). The price target was lowered from $41 to $34. The weak orders for Q2 and below consensus guidance for Q3 imply that 2H will be significantly weaker than the analysts had estimated.

The company reported its F2Q EPS marginally ahead of the consensus and the estimates, with in-line sales that were flat, year-on-year. The EBIT margin, however, were ahead of expectations for the quarter.

Keysight Technologies has announced its guidance for F3Q below the consensus, driven by soft order growth. Excluding large orders, the analysts expect the company to witness flat year on year orders.

In addition, the T&M market appears to have decelerated in C1Q. This is apparent from not only Keysight's outlook but also from the downgraded CY15 outlooks of the company's T&M peers. This is consistent with a deceleration in global IP and challenged capital spending, according to the analysts.

The company intends to undertake several incremental cost reduction actions, targeting total cost savings of $25 million over two years.